NEW YORK--(BUSINESS WIRE)--Shake Shack Inc. (“Shake Shack” or the “Company”) (NYSE: SHAK),
today reported financial results for the fourth quarter and the fiscal
year ended December 28, 2016, periods that included 13 and 52 weeks,
respectively.

* Shack-level operating profit, adjusted EBITDA and adjusted pro
forma net income are non-GAAP measures. Reconciliations of Shack-level
operating profit to operating income, adjusted EBITDA to net income, and
adjusted pro forma net income to net income (loss) attributable to Shake
Shack Inc., the most directly comparable financial measures presented in
accordance with GAAP, are set forth in the schedules accompanying this
release. See “Non-GAAP Financial Measures.”

Randy Garutti, Chief Executive Officer of Shake Shack, stated, “I am
proud of what our team has achieved in our second full year as a public
company. I’m especially pleased given the challenging industry backdrop
in retail and restaurants. And, we achieved all of this while furthering
our commitment to growing in premier locations, and building an even
better team member and guest experience that fosters the long term
strength of the Shake Shack brand for years to come. Looking ahead, 2017
is shaping up to be an exciting year of growth with a strong pipeline of
new domestic openings, as well as the evolution of the Shack App, which
is just one part of our long term strategy to meet our guests, whenever,
and wherever they are."

Development Highlights

During the quarter, the Company opened six domestic company-operated
Shacks, which included its first Shack in Houston at The Galleria, a
Shack in New York's Penn Station, and a new free-standing model Shack in
Delaware across from the Christiana Fashion Center, as well as
additional Shacks in the California, Georgia, and DC markets.
Additionally, the Company opened four international licensed Shacks
during the quarter, including its second Shack in Korea in the Cheongdam
neighborhood, as well as additional Shacks in the United Kingdom and
Middle East markets, and a domestic licensed Shack at the Wells Fargo
Center in Philadelphia.

Location

Type

Opening Date

Muscat, Oman — City Centre Muscat

International Licensed

February 6

Scottsdale, AZ — Fashion Square

Domestic Company-Operated

February 26

Phoenix, AZ — Uptown Plaza

Domestic Company-Operated

March 9

West Hollywood, CA — West Hollywood

Domestic Company-Operated

March 15

Las Vegas, NV — T-Mobile Arena

Domestic Licensed

April 6

Tokyo, Japan — Ebisu Atre West

International Licensed

April 15

Manama, Bahrain — City Centre Bahrain

International Licensed

April 30

Arlington, VA — Fashion Centre at Pentagon City

Domestic Company-Operated

May 4

New York, NY — Herald Square

Domestic Company-Operated

May 18

Forest Hills, NY — Forest Hills

Domestic Company-Operated

May 26

Bloomington, MN — Mall of America

Domestic Company-Operated

June 9

Abu Dhabi, UAE — Marina Mall

International Licensed

July 9

New York, NY — Fulton Transit Center

Domestic Company-Operated

July 15

Seoul, Korea — Gangnam Avenue

International Licensed

July 22

Yonkers, NY — Cross County Shopping Center

Domestic Company-Operated

July 22

Boston, MA — Boston Seaport

Domestic Company-Operated

August 16

King of Prussia, PA — King of Prussia #2

Domestic Company-Operated

September 1

Dallas, TX — The Crescent

Domestic Company-Operated

September 1

Riyadh, KSA — Al Faisaliah Mall

International Licensed

September 3

Scottsdale, AZ — Kierland Commons

Domestic Company-Operated

September 15

Tokyo, Japan — Tokyo International Forum

International Licensed

September 22

Glendale, CA — The Americana

Domestic Company-Operated

September 23

Los Angeles, CA — Hollywood

Domestic Company-Operated

October 12

Philadelphia, PA — Wells Fargo Center

Domestic Licensed

October 20

Atlanta, GA — Perimeter Mall

Domestic Company-Operated

October 24

Farwaniya, Kuwait — Kuwait Airport

International Licensed

October 31

Houston, TX — Houston Galleria

Domestic Company-Operated

November 4

New York, NY — Penn Station

Domestic Company-Operated

December 3

London, United Kingdom — Leicester Square

International Licensed

December 8

National Harbor, MD — MGM National Harbor

Domestic Company-Operated

December 8

Doha, Qatar — Mall of Qatar

International Licensed

December 10

New Castle, DE — Christiana

Domestic Company-Operated

December 14

Seoul, Korea — Cheongdam

International Licensed

December 17

Subsequent to the end of the quarter, the Company opened its first Shack
in Detroit, Michigan, a third Shack in Connecticut and a fourth Shack in
the California market in Century City. The Company also opened two
licensed Shacks in London at Canary Wharf and Victoria Nova, as well as
five additional Shacks in the Middle East.

Fourth Quarter 2016 Review

Total revenue, which includes Shack sales and licensing revenue,
increased 43.5% to $73.3 million in the fourth quarter of 2016, from
$51.1 million for the fourth quarter of 2015. Shack sales for the fourth
quarter of 2016 were $70.9 million, an increase of 43.8% from $49.3
million in the same quarter last year due primarily to the opening of 20
new domestic company-operated Shacks. Licensing revenue for the fourth
quarter was $2.4 million, an increase of 34.6% from $1.7 million in the
same quarter last year, primarily due to the opening of 10 net new
licensed Shacks, offset by lower licensing revenue from Shacks in the
Middle East as a result of the macroeconomic conditions in the region.

Same-Shack sales increased 1.6% for the fourth quarter of 2016 versus
11.0% growth in the fourth quarter last year. The comparable Shack base
includes those restaurants open for 24 months or longer. For the fourth
quarter of 2016, the comparable Shack base included 30 Shacks versus 21
Shacks for the fourth quarter of 2015.

Average weekly sales for domestic company-operated Shacks was $90,000
for the fourth quarter of 2016 compared to $89,000 for the same quarter
last year, a 1.1% increase, primarily due to increased menu prices and
favorable shifts in sales mix from menu innovation.

Shack-level operating profit, a non-GAAP measure, increased 29.9% to
$18.0 million for the fourth quarter of 2016 from $13.9 million in the
same quarter last year. As a percentage of Shack sales, Shack-level
operating profit margins decreased 280 basis points to 25.4% primarily
due to increased labor and related expenses resulting from the
company-wide increase to the starting hourly wage that was implemented
at the beginning of the fiscal year, increased medical claims and
staffing investment to support future Shack growth, as well as higher
repair and maintenance and utilities costs. These increases were
partially offset by lower commodity costs, primarily beef. A
reconciliation of operating income to Shack-level operating profit, the
most directly comparable GAAP financial measure, is set forth in the
schedules accompanying this release. See “Non-GAAP Financial Measures.”

General and administrative expenses increased to $8.3 million for the
fourth quarter of 2016 from $7.7 million in the same quarter last year.
As a percentage of total revenue, general and administrative expenses
decreased to 11.3% for the fourth quarter of 2016 from 15.0% in the
fourth quarter last year, primarily due to $0.8 million of expense
recognized during the prior year quarter related to a legal settlement
and increased levels of Shack sales.

Net income was $3.9 million, or $0.15 per diluted share, for the fourth
quarter of 2016, compared to $1.2 million, or $0.07 per diluted share,
for the same period last year.

Adjusted EBITDA, a non-GAAP measure, increased 31.6% to $11.4 million.
As a percent of total revenue, adjusted EBITDA margins decreased
approximately 140 basis points to 15.6% compared to 17.0% for the year
ago period. A reconciliation of net income to adjusted EBITDA, the most
directly comparable GAAP financial measure, is set forth in the
schedules accompanying this release. See “Non-GAAP Financial Measures.”

Adjusted pro forma net income, a non-GAAP measure, was $3.3 million, or
$0.09 per fully exchanged and diluted share during the fourth quarter of
2016, compared to $2.9 million, or $0.08 per diluted share during the
fourth quarter of 2015. A reconciliation of net income (loss)
attributable to Shake Shack Inc. to adjusted pro forma net income is set
forth in the schedules accompanying this release. See “Non-GAAP
Financial Measures.”

Fiscal Year 2016 Review

Total revenue increased 40.9% to $268.5 million for fiscal 2016, from
$190.6 million for fiscal 2015. The growth in Shack sales was primarily
driven by the opening of 20 new domestic company-operated Shacks, as
well as same-Shack sales growth.

Shack-level operating profit, a non-GAAP measure, increased 38.6% to
$73.3 million for fiscal 2016 from $52.9 million for fiscal 2015. As a
percentage of Shack sales, Shack-level operating profit margins
decreased approximately 60 basis points to 28.3% primarily due to
increased labor and related expenses resulting from the company-wide
increase to the starting hourly wage that was implemented at the
beginning of the fiscal year and staffing investment to support future
Shack growth, as well as higher repair and maintenance and utilities
costs. These increases were partially offset by lower commodity costs,
primarily beef. A reconciliation of operating income to Shack-level
operating profit, the most directly comparable GAAP financial measure,
is set forth in the schedules accompanying this release. See “Non-GAAP
Financial Measures.”

General and administrative expenses decreased to $30.6 million for
fiscal 2016 from $37.8 million for fiscal 2015. As a percentage of total
revenue, general and administrative expenses decreased to 11.4% for
fiscal 2016 from 19.8% in fiscal 2015, primarily due to non-recurring
expenses incurred in the prior year, including $12.8 million of
non-recurring compensation expenses, $0.6 million of IPO-related
expenses and $0.8 million of expense related to a legal settlement.

Net income was $12.4 million, or $0.53 per diluted share, for fiscal
2016, compared to net loss of $8.8 million, or $0.65 per diluted share,
for the same period a year ago.

Adjusted EBITDA, a non-GAAP measure, increased 35.7% to $50.2 million
from $37.0 million for the fiscal year. As a percent of total revenue,
adjusted EBITDA decreased roughly 70 basis points to 18.7% compared to
19.4% for the year ago period. A reconciliation of net income to
adjusted EBITDA, the most directly comparable GAAP financial measure, is
set forth in the schedules accompanying this release. See “Non-GAAP
Financial Measures.”

Adjusted pro forma net income, a non-GAAP measure, was $16.8 million, or
$0.46 per fully exchanged and diluted share for fiscal 2016, compared to
$12.0 million, or $0.32 per fully exchanged and diluted share for fiscal
2015. A reconciliation of net income (loss) attributable to Shake Shack
Inc. to adjusted pro forma net income is set forth in the schedules
accompanying this release. See “Non-GAAP Financial Measures.”

2017 Outlook

For the fiscal year ending December 27, 2017, the Company is providing
the following financial outlook:

Raising total revenue guidance to between $349 million and $353
million (vs. $348 million and $352 million).

Same-Shack sales growth between 2% and 3%, which includes
approximately 1.5% to 2% of menu price increases taken in early
January and nominal traffic and mix increases.

Increasing our previous development plan guidance to between 22 and 23
(vs. between 21 and 22) new domestic company-operated Shacks (with
average annual sales volumes of at least $3.2 million and Shack-level
operating profit margins of at least 21%).

Increasing to 11 net new licensed Shacks to be opened in fiscal 2017
(vs. 10 net).

Shack-level operating profit margin between 26.5% and 27.5%.

Increasing general and administrative expenses to between $38 million
and $40 million (vs. $37 million to $39 million).

Increasing depreciation expense to approximately $22 million (vs. $21
million).

Interest expense between $1.6 million and $2.0 million.

Adjusted pro forma effective tax rate to between 40.0% and 41.0%.

Earnings Conference Call

As previously announced, the Company will host a conference call to
discuss its fourth quarter and fiscal year 2016 financial results today
at 5:00 p.m. ET.

The conference call can be accessed live over the phone by dialing (888)
710-4015 or for international callers by dialing (913) 312-0666. A
replay will be available after the call and can be accessed by dialing
(844) 512-2921 or for international callers by dialing (412) 317-6671;
the passcode is 6160783. The replay will be available until March 8,
2017.

The conference call will also be webcast live from the Company's
Investor Relations website at http://investor.shakeshack.com.
An archive of the webcast will be available at the same location on the
website shortly after the call has concluded.

Definitions

The following definitions apply to these terms as used in this release:

"Shack sales" is defined as the aggregate sales of food and beverages in
domestic company-operated Shacks and excludes sales from licensed Shacks.

"Same-Shack sales" represents Shack sales for the comparable Shack base,
which is defined as the number of domestic company-operated Shacks open
for 24 months or longer.

"Average unit volumes" or "AUVs" for any 12-month period consist of the
average annualized sales of all domestic company-operated Shacks over
that period. AUVs are calculated by dividing total Shack sales from
domestic company-operated Shacks by the number of domestic
company-operated Shacks open during that period. For Shacks that are not
open for the entire period, fractional adjustments are made to the
number of Shacks open such that it corresponds to the period of
associated sales. The measurement of AUVs allows the Company to assess
changes in guest traffic and per transaction patterns at domestic
company-operated Shacks.

"Average weekly sales" is calculated by dividing total Shack sales by
the number of operating weeks for all Shacks in operation during the
period. For Shacks that are not open for the entire period, fractional
adjustments are made to the number of operating weeks open such that it
corresponds to the period of associated sales.

"Shack-level operating profit," a non-GAAP measure, is defined as Shack
sales less Shack-level operating expenses including food and paper
costs, labor and related expenses, other operating expenses and
occupancy and related expenses.

"Shack-level operating profit margin," a non-GAAP measure, is defined as
Shack sales less Shack-level operating expenses including food and paper
costs, labor and related expenses, other operating expenses and
occupancy and related expenses as a percentage of Shack sales.

“EBITDA,” a non-GAAP measure, is defined as net income before net
interest, taxes, depreciation and amortization.

“Adjusted EBITDA,” a non-GAAP measure, is defined as net income before
net interest, taxes, depreciation and amortization, which also excludes
equity-based compensation expense, deferred rent expense, losses on the
disposal of property and equipment, as well as certain non-recurring
items that the Company does not believe directly reflect its core
operations. Effective September 28, 2016, the Company no longer excludes
pre-opening costs from its computation of Adjusted EBITDA. Prior period
amounts have been restated to conform to the current period computation
methodology.

"Adjusted pro forma net income," a non-GAAP measure, represents net
income (loss) attributable to Shake Shack Inc. assuming the full
exchange of all outstanding SSE Holdings, LLC membership interests ("LLC
Interests") for shares of Class A common stock, adjusted for certain
non-recurring items that the Company does not believe directly reflect
its core operations.

Conference Participation

Shake Shack will be presenting at the J.P. Morgan Gaming, Lodging,
Restaurant & Leisure Management Access Forum at the Encore at Wynn Las
Vegas on Thursday, March 2, 2017. Presenting from the Company will be
Randy Garutti, Chief Executive Officer, and Jeff Uttz, Chief Financial
Officer. The presentation will begin at 4:40 p.m. PT. The presentation
will also be webcast live from the Company's Investor Relations website
at http://investor.shakeshack.com.

About Shake Shack

Shake Shack is a modern day “roadside” burger stand known for its 100%
all-natural Angus beef burgers and flat-top vienna beef dogs (no added
hormones and no antibiotics ever), 100% all-natural cage-free chicken
(no antibiotics ever), spun-fresh frozen custard, crinkle cut fries,
craft beer and wine (available at select locations) and more. With its
fresh, simple, high-quality food at a great value, Shake Shack is a fun
and lively community gathering place with widespread appeal. From its
premium ingredients and caring hiring practices to its inspiring designs
and deep community investment, Shake Shack’s mission is to Stand For
Something Good®. Since the original Shack opened in 2004 in NYC’s
Madison Square Park, the company has opened multiple locations in 16
states and the District of Columbia, as well as international locations
including London, Istanbul, Dubai, Tokyo, Moscow, Seoul and more.

Forward-Looking Statements

This press release contains forward-looking statements, within the
meaning of the Private Securities Litigation Reform Act of 1995
("PSLRA"), which are subject to known and unknown risks, uncertainties
and other important factors that may cause actual results to be
materially different. All statements other than statements of historical
fact included in this press release are forward-looking statements,
including, but not limited to, expected financial outlook for fiscal
2016, preliminary financial outlook for fiscal 2017, expected Shack
openings, expected same-Shack sales growth and trends in the Company’s
operations. Forward-looking statements discuss the Company's current
expectations and projections relating to their financial position,
results of operations, plans, objectives, future performance and
business. You can identify forward-looking statements by the fact that
they do not relate strictly to historical or current facts. These
statements may include words such as "aim," "anticipate," "believe,"
"estimate," "expect," "forecast," "outlook," "potential," "project,"
"projection," "plan," "intend," "seek," "may," "could," "would," "will,"
"should," "can," "can have," "likely," the negatives thereof and other
similar expressions. All forward-looking statements are expressly
qualified in their entirety by these cautionary statements, except that
the safe harbor provisions of the PSLRA do not apply to any
forward-looking statements relating to the operations of any of the
Company's partnerships or limited liability companies. You should
evaluate all forward-looking statements made in this press release in
the context of the risks and uncertainties disclosed in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 30,
2015 and subsequent Quarterly Reports on Form 10-Q filed with the
Securities and Exchange Commission ("SEC"). All of the Company's SEC
filings are available online at www.sec.gov,
www.shakeshake.com
or upon request from Shake Shack Inc. The forward-looking statements
included in this press release are made only as of the date hereof. The
Company undertakes no obligation to publicly update or revise any
forward-looking statement as a result of new information, future events
or otherwise, except as otherwise required by law.

SHAKE SHACK INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(UNAUDITED)

(in thousands, except per share amounts)

Fiscal Quarter Ended

Fiscal Year Ended

December 28 2016

December 30 2015

December 28 2016

December 30 2015

Shack sales

$

70,920

96.8

%

$

49,314

96.6

%

$

259,350

96.6

%

$

183,219

96.1

%

Licensing revenue

2,351

3.2

%

1,747

3.4

%

9,125

3.4

%

7,373

3.9

%

TOTAL REVENUE

73,271

100.0

%

51,061

100.0

%

268,475

100.0

%

190,592

100.0

%

Shack-level operating expenses(1):

Food and paper costs

20,223

28.5

%

14,429

29.3

%

73,752

28.4

%

54,079

29.5

%

Labor and related expenses

18,900

26.6

%

12,307

25.0

%

65,540

25.3

%

44,752

24.4

%

Other operating expenses

7,471

10.5

%

4,728

9.6

%

24,946

9.6

%

16,307

8.9

%

Occupancy and related expenses

6,279

8.9

%

3,959

8.0

%

21,820

8.4

%

15,207

8.3

%

General and administrative expenses

8,291

11.3

%

7,660

15.0

%

30,556

11.4

%

37,825

19.8

%

Depreciation expense

4,273

5.8

%

2,948

5.8

%

14,502

5.4

%

10,222

5.4

%

Pre-opening costs

2,812

3.8

%

1,376

2.7

%

9,520

3.5

%

5,430

2.8

%

Loss on disposal of property and equipment

34

—

%

—

—

%

34

—

%

17

—

%

TOTAL EXPENSES

68,283

93.2

%

47,407

92.8

%

240,670

89.6

%

183,839

96.5

%

OPERATING INCOME

4,988

6.8

%

3,654

7.2

%

27,805

10.4

%

6,753

3.5

%

Other income, net

868

1.2

%

7

—

%

1,065

0.4

%

7

—

%

Interest expense

(107

)

(0.1

)%

(87

)

(0.2

)%

(374

)

(0.1

)%

(332

)

(0.2

)%

INCOME BEFORE INCOME TAXES

5,749

7.8

%

3,574

7.0

%

28,496

10.6

%

6,428

3.4

%

Income tax expense

292

0.4

%

528

1.0

%

6,350

2.4

%

3,304

1.7

%

NET INCOME

5,457

7.4

%

3,046

6.0

%

22,146

8.2

%

3,124

1.6

%

Less: net income attributable to non-controlling interests

1,537

2.1

%

1,800

3.5

%

9,700

3.6

%

11,900

6.2

%

NET INCOME (LOSS) ATTRIBUTABLE TO SHAKE SHACK INC.

$

3,920

5.4

%

$

1,246

2.4

%

$

12,446

4.6

%

$

(8,776

)

(4.6

)%

Earnings (loss) per share of Class A common stock:

Basic

$

0.16

$

0.08

$

0.54

$

(0.65

)

Diluted

$

0.15

$

0.07

$

0.53

$

(0.65

)

Weighted-average shares of Class A common stock outstanding:

Basic

24,895

16,585

22,956

13,588

Diluted

36,858

17,317

23,449

13,588

(1)

As a percentage of Shack sales.

SHAKE SHACK INC.

SELECTED BALANCE SHEET AND OPERATING DATA

(UNAUDITED)

(dollar amounts in thousands)

December 28 2016

December 30 2015

SELECTED BALANCE SHEET DATA:

Cash and cash equivalents(1)

$

11,607

$

70,849

Total assets

$

538,194

$

379,547

Total liabilities

$

336,841

$

222,528

Total equity

$

201,353

$

157,019

(1)

The decrease in cash and cash equivalents was driven by the
purchase of approximately $60.3 million of marketable securities
(net of sales) during the fiscal year ended December 28, 2016,
which are no longer included in the cash and cash equivalents
balance as of December 28, 2016.

Fiscal Quarter Ended

Fiscal Year Ended

December 28 2016

December 30 2015

December 28 2016

December 30 2015

SELECTED OPERATING DATA:

Same-Shack sales growth

1.6

%

11.0

%

4.2

%

13.3

%

Shacks in the comparable base

30

21

30

21

Shack system-wide sales(1)

$

107,063

$

75,503

$

402,791

$

295,257

Average weekly sales

Domestic company-operated

$

90

$

89

$

96

$

96

Average unit volumes:

Domestic company-operated

n/a

n/a

$4,981

$4,976

International licensed

n/a

n/a

$3,334

$3,413

Shack-level operating profit

$

18,047

$

13,891

$

73,292

$

52,874

Shack-level operating profit margin

25.4

%

28.2

%

28.3

%

28.9

%

Adjusted EBITDA

$

11,436

$

8,688

$

50,234

$

37,011

Adjusted EBITDA margin

15.6

%

17.0

%

18.7

%

19.4

%

Capital expenditures

$

15,165

$

6,790

$

54,433

$

32,117

Shack counts (at end of period):

System-wide

114

84

114

84

Domestic company-operated

64

44

64

44

Domestic licensed

7

5

7

5

International licensed

43

35

43

35

(1)

Shack system-wide sales is an operating measure and consists of
sales from our domestic company-operated Shacks, our domestic
licensed Shacks and our international licensed Shacks. The Company
does not recognize the sales from licensed Shacks as revenue. Of
these amounts, revenue is limited to Shack sales from domestic
company-operated Shacks and licensing revenue based on a
percentage of sales from domestic and international licensed Shacks.

Shack-level operating profit is defined as Shack sales less Shack-level
operating expenses including food and paper costs, labor and related
expenses, other operating expenses and occupancy and related expenses.

How This Measure Is Useful

When used in conjunction with GAAP financial measures, Shack-level
operating profit and Shack-level operating profit margin are
supplemental measures of operating performance that the Company believes
are useful measures to evaluate the performance and profitability of its
Shacks. Additionally, Shack-level operating profit and Shack-level
operating profit margin are key metrics used internally by management to
develop internal budgets and forecasts, as well as assess the
performance of its Shacks relative to budget and against prior periods.
It is also used to evaluate employee compensation as it serves as a
metric in certain performance-based employee bonus arrangements. The
Company believes presentation of Shack-level operating profit and
Shack-level operating profit margin provides investors with a
supplemental view of its operating performance that can provide
meaningful insights to the underlying operating performance of the
Shacks, as these measures depict the operating results that are directly
impacted by the Shacks and exclude items that may not be indicative of,
or are unrelated to, the ongoing operations of the Shacks. It may also
assist investors to evaluate the Company's performance relative to peers
of various sizes and maturities and provides greater transparency with
respect to how management evaluates the business, as well as the
financial and operational decision-making.

Limitations of the Usefulness of this Measure

Shack-level operating profit and Shack-level operating profit margin are
not necessarily equivalent to similarly titled measures used by other
companies due to different methods of calculation. Presentation of
Shack-level operating profit and Shack-level operating profit margin is
not intended to be considered in isolation or as a substitute for, or
superior to, the financial information prepared and presented in
accordance with GAAP. Shack-level operating profit excludes certain
costs, such as general and administrative expenses and pre-opening
costs, which are considered normal, recurring cash operating expenses
and are essential to support the operation and development of the
Company's Shacks. Therefore, this measure may not provide a complete
understanding of the Company's operating results as a whole and
Shack-level operating profit and Shack-level operating profit margin
should be reviewed in conjunction with our GAAP financial results. A
reconciliation of Shack-level operating profit to operating income, the
most directly comparable GAAP financial measure, is set forth below.

Fiscal Quarter Ended

Fiscal Year Ended

(dollar amounts in thousands)

December 28 2016

December 30 2015

December 28 2016

December 30 2015

Operating income

$

4,988

$

3,654

$

27,805

$

6,753

Less:

Licensing revenue

2,351

1,747

9,125

7,373

Add:

General and administrative expenses

8,291

7,660

30,556

37,825

Depreciation expense

4,273

2,948

14,502

10,222

Pre-opening costs

2,812

1,376

9,520

5,430

Loss on disposal of property and equipment

34

—

34

17

Shack-level operating profit

$

18,047

$

13,891

$

73,292

$

52,874

Total revenue

$

73,271

$

51,061

$

268,475

$

190,592

Less: licensing revenue

2,351

1,747

9,125

7,373

Shack sales

$

70,920

$

49,314

$

259,350

$

183,219

Shack-level operating profit margin

25.4

%

28.2

%

28.3

%

28.9

%

SHAKE SHACK INC.NON-GAAP FINANCIAL MEASURES(UNAUDITED)

EBITDA and Adjusted EBITDA

EBITDA is defined as net income before net interest, income tax expense
and depreciation and amortization expense. Adjusted EBITDA is defined as
EBITDA (as defined above) excluding equity-based compensation expense,
deferred rent expense, losses on the disposal of property and equipment,
as well as certain non-recurring items that the Company does not believe
directly reflect its core operations and may not be indicative of the
Company's recurring business operations.

How These Measures Are Useful

When used in conjunction with GAAP financial measures, EBITDA and
Adjusted EBITDA are supplemental measures of operating performance that
the Company believes are useful measures to facilitate comparisons to
historical performance and competitors' operating results. Adjusted
EBITDA is a key metric used internally by management to develop internal
budgets and forecasts and also serves as a metric in its
performance-based equity incentive programs and certain bonus
arrangements. The Company believes presentation of EBITDA and Adjusted
EBITDA provides investors with a supplemental view of the Company's
operating performance that facilitates analysis and comparisons of its
ongoing business operations because they exclude items that may not be
indicative of the Company's ongoing operating performance.

Limitations of the Usefulness of These Measures

EBITDA and Adjusted EBITDA are not necessarily comparable to similarly
titled measures used by other companies due to different methods of
calculation. Presentation of EBITDA and Adjusted EBITDA is not intended
to be considered in isolation or as a substitute for, or superior to,
the financial information prepared and presented in accordance with
GAAP. EBITDA and Adjusted EBITDA exclude certain normal recurring
expenses. Therefore, these measures may not provide a complete
understanding of the Company's performance and should be reviewed in
conjunction with the GAAP financial measures. A reconciliation of EBITDA
and Adjusted EBITDA to net income, the most directly comparable GAAP
measure, is set forth below.

Fiscal Quarter Ended

Fiscal Year Ended

(in thousands)

December 28 2016

December 30

2015(1)

December 28 2016

December 30

2015(1)

Net income

$

5,457

$

3,046

$

22,146

$

3,124

Depreciation expense

4,273

2,948

14,502

10,222

Interest expense, net

87

80

285

325

Income tax expense

292

528

6,350

3,304

EBITDA

10,109

6,602

43,283

16,975

Equity-based compensation

1,537

1,172

5,354

4,314

Deferred rent

444

144

2,251

1,482

Loss on disposal of property and equipment

34

—

34

17

Non-recurring compensation expenses related to the IPO(2)

—

—

—

12,818

IPO-related expenses

—

—

—

635

Legal settlement

—

770

—

770

Other income related to adjustment of liabilities under tax
receivable agreement

(688

)

—

(688

)

—

ADJUSTED EBITDA

$

11,436

$

8,688

$

50,234

$

37,011

(1)

The Company no longer excludes pre-opening costs from its
computation of Adjusted EBITDA. Adjusted EBITDA for the fiscal
quarter and year ended December 30, 2015 has been restated to
conform to the current period computation methodology.

Adjusted pro forma net income represents net income (loss) attributable
to Shake Shack Inc. assuming the full exchange of all outstanding SSE
Holdings, LLC membership interests ("LLC Interests") for shares of Class
A common stock, adjusted for certain non-recurring items that the
Company doesn't believe directly reflect its core operations and may not
be indicative of recurring business operations. Adjusted pro forma
earnings per fully exchanged and diluted share is calculated by dividing
adjusted pro forma net income by the weighted-average shares of Class A
common stock outstanding, assuming the full exchange of all outstanding
LLC Interests, after giving effect to the dilutive effect of outstanding
equity-based awards.

How These Measures Are Useful

When used in conjunction with GAAP financial measures, adjusted pro
forma net income and adjusted pro forma earnings per fully exchanged and
diluted share are supplemental measures of operating performance that
the Company believes are useful measures to evaluate performance period
over period and relative to its competitors. By assuming the full
exchange of all outstanding LLC Interests, the Company believes these
measures facilitate comparisons with other companies that have different
organizational and tax structures, as well as comparisons period over
period because it eliminates the effect of any changes in net income
attributable to Shake Shack Inc. driven by increases in its ownership of
SSE Holdings, which are unrelated to the Company's operating
performance, and excludes items that are non-recurring or may not be
indicative of ongoing operating performance.

Limitations of the Usefulness of These Measures

Adjusted pro forma net income and adjusted pro forma earnings per fully
exchanged and diluted share are not necessarily comparable to similarly
titled measures used by other companies due to different methods of
calculation. Presentation of adjusted pro forma net income and adjusted
pro forma earnings per fully exchanged and diluted share should not be
considered alternatives to net income (loss) and earnings (loss) per
share, as determined under GAAP. While these measures are useful in
evaluating the Company's performance, it does not account for the
earnings attributable to the non-controlling interest holders and
therefore does not provide a complete understanding of the net income
attributable to Shake Shack Inc. Adjusted pro forma net income and
adjusted pro forma earnings per fully exchanged and diluted share should
be evaluated in conjunction with GAAP financial results. A
reconciliation of adjusted pro forma net income to net income (loss)
attributable to Shake Shack Inc., the most directly comparable GAAP
measure, and the computation of adjusted pro forma earnings per fully
exchanged and diluted share are set forth below.

Fiscal Quarter Ended

Fiscal Year Ended

(in thousands, except per share amounts)

December 28 2016

December 30 2015

December 28 2016

December 30 2015

Numerator:

Net income (loss) attributable to Shake Shack Inc.

$

3,920

$

1,246

$

12,446

$

(8,776

)

Adjustments:

Reallocation of net income attributable to non-controlling interests
from the assumed exchange of LLC Interests(1)

1,537

1,800

9,700

11,900

Non-recurring compensation expenses incurred in connection with the
IPO(2)

—

—

—

12,818

IPO-related expenses

—

—

—

635

Legal settlement

—

770

—

770

Other income related to adjustment of liabilities under tax
receivable agreement

(688

)

—

(688

)

—

Impact of rate change on deferred tax assets

(1,526

)

—

(1,526

)

—

Income tax expense(3)

7

(905

)

(3,164

)

(5,302

)

Adjusted pro forma net income

$

3,250

$

2,911

$

16,768

$

12,045

Denominator:

Weighted-average shares of Class A common stock outstanding—diluted

36,858

17,317

23,449

13,588

Adjustments:

Assumed exchange of LLC Interests for shares of Class A common stock(1)

Assumes the exchange of all outstanding LLC Interests for
shares of Class A common stock, resulting in the elimination of
the non-controlling interest and recognition of the net income
attributable to non-controlling interests.

Represents the tax effect of the aforementioned adjustments and
pro forma adjustments to reflect corporate income taxes at assumed
effective tax rates of 35.8% and 39.7% for the fiscal quarter and
year ended December 28, 2016, respectively, and 33.0% and 41.7%
for the fiscal quarter and year ended December 30, 2015,
respectively. Amounts include provisions for U.S. federal income
taxes, certain LLC entity-level taxes and foreign withholding
taxes, assuming the highest statutory rates apportioned to each
applicable state, local and foreign jurisdiction.